(b)the main purpose, or one of the main purposes, of entering into it was to secure that amounts payable by the member under the contract were not dealt with on the basis set out in subsection (3G),

the contract is treated for the purposes of subsections (3C) to (3E) as if it were a stop-loss insurance (and, accordingly, the amounts payable under it are treated for those purposes as premiums).

(3G)Amounts are dealt with on the basis set out in this subsection if they are treated as payable in the underwriting year in which the profits or losses arising to a corporate member directly from its membership of one or more syndicates are declared.”

(2)The amendment made by this section has effect in relation to—

(a)any stop-loss insurance (as defined by section 230(1) of FA 1994) taken out on or after 6 December 2011, or

(b)any quota share contract (as defined by section 225(4) of FA 1994) entered into on or after that date.

(3)If before 6 December 2011 a corporate member enters into a multi-year contract—

(a)insurance is to be regarded for the purposes of subsection (2)(a) as taken out on the anniversary date of the contract which falls on or after the day on which this Act is passed, and

(b)premiums payable under the insurance in respect of an underwriting year beginning on or after that day are premiums falling to be dealt with in accordance with the amendment made by this section.

(4)For this purpose—

“multi-year contract” means a contract which (unless cancelled) operates in respect of successive underwriting years, and

“the anniversary date of the contract” means the date which is the anniversary of the date on which the contract was entered into.

(5)If—

(a)before 6 December 2011 a corporate member enters into a contract for insurance in respect of an underwriting year, and

(b)on or after 6 December 2011 the contract is renewed in respect of a further underwriting year (whether as a result of the exercise of an option conferred by the contract or otherwise),

insurance is to be regarded for the purposes of subsection (2)(a) as taken out on the date of the renewal.

26Abolition of relief for equalisation reserves: general insurers

(1)Sections 444BA to 444BD of ICTA (equalisation reserves) are repealed.

(2)In consequence of the repeal of those sections, omit—

(a)in TMA 1970, in the second column of the table in section 98, the entry relating to regulations under section 444BB of ICTA and the entry relating to regulations under section 444BD of ICTA,

(b)in FA 1996, section 166 and Schedule 32,

(c)in FA 2003, in section 153(1)(a), the reference “444BB(3)(b),”,

(d)in CTA 2009, paragraphs 155 and 156 of Schedule 1, and

(e)in TIOPA 2010, paragraph 9 of Schedule 8.

(3)The amendments made by this section have effect in relation to accounting periods ending on or after such day (“the specified day”) as is specified in an order made by the Treasury (and different days may be specified for different cases).

(4)In the case of an insurance company’s existing equalisation or equivalent reserve—

(a)an amount equal to one-sixth of the amount of the reserve is to be treated as a receipt of the company’s business in the calendar year in which the specified day falls, and

(b)an amount equal to one-sixth of the amount of the reserve is to be treated as a receipt of the company’s business in each of the next five calendar years.

(5)If there are different accounting periods falling in a calendar year, a receipt arising as a result of subsection (4) is apportioned between those periods in proportion to the number of days of the calendar year falling in those periods.

(6)If—

(a)the company ceases to carry on the business in a calendar year, and

(b)an amount would otherwise have been treated as a result of subsection (4) as a receipt of the company’s business in a later calendar year,

any amount within paragraph (b) is treated instead as a receipt of the company’s business in the accounting period in which the company ceased to carry on the business.

(7)For the purposes of this section—

(a)“equalisation reserve”, in relation to an insurance company, means the equalisation reserve in respect of a business which the company was required, by virtue of equalisation reserves rules (within the meaning of section 444BA of ICTA), to maintain,

(b)“equivalent reserve” means an equivalent reserve (within the meaning of section 444BD of ICTA) in relation to which section 444BA of ICTA applied,

(c)a company’s “existing” equalisation or equivalent reserve means the equalisation or equivalent reserve as it stood immediately before the first accounting period of the company (“the relevant accounting period”) in relation to which the amendments made by this section have effect (but see subsection (8)), and

(d)references in this section to the company’s business are to the business in respect of which the equalisation or equivalent reserve was maintained.

(8)If—

(a)an insurance company has made an election under section 444BA(4) of ICTA in relation to an accounting period ending before the specified day, and

(b)an amount would, but for this section, have been carried forward to the relevant accounting period of the company as a deductible amount,

that amount is not to be carried forward to that period as a deductible amount but is instead to be deducted from the amount of the equalisation or equivalent reserve as it stood immediately before that period.

(9)References in this section to section 444BA of ICTA include that section as modified by regulations made under section 444BB or 444BC of that Act.

(1)An insurance company may make an election in relation to a calendar year (“the relevant year”) for all of the amounts that would, as a result of section 26(4), otherwise be treated as arising in later calendar years as receipts of a business carried on by the company to be treated instead as receipts of the business arising in the relevant year.

(2)An election under this section—

(a)must be made by notice to an officer of Revenue and Customs within 2 years from the end of the relevant year, and

(b)is irrevocable.

(3)A company which makes an election under section 29 as the transferor or the transferee may make an election under this section but not in relation to the calendar year in which the transfer takes place.

(a)a receipt is treated as arising to an insurance company’s business in an accounting period as a result of section 26(4),

(b)the company carries on business through a permanent establishment outside the United Kingdom by reference to which double taxation relief is afforded in respect of any income or gains, and

(c)the permanent establishment is one in relation to which regulation 10(2) of the Insurance Companies (Reserves) (Tax) Regulations 1996 previously applied.

(2)For the purpose of calculating the profits or losses by reference to which double taxation relief is afforded for the accounting period, only the appropriate proportion (if any) of the receipt is to be taken into account.

(3)The appropriate proportion of the receipt is—

(a)equal to the mean of each proportion found for each relevant period (if any), or

(b)equal to such other proportion as the company may determine on a just and reasonable basis.

(4)For the purposes of subsection (3)(a) a proportion for a relevant period is the proportion which the PE’s premium income for the period bears to the company’s premium income for the period.

“the company’s premium income”, in relation to a relevant period, means the amount of net premiums written by reference to which the calculation under section 444BA(2)(a) or (b) of ICTA was made for the period,

“the PE’s premium income”, in relation to a relevant period, means so much of the company’s premium income for the period as is attributable to the permanent establishment, and

a “relevant period” means an accounting period of the company in relation to which each of the following conditions is met—

(a)

section 444BA of ICTA has applied in relation to the accounting period,

(b)

the business mentioned in subsection (1)(a) has been carried on through the permanent establishment in the accounting period, and

(c)

the accounting period is the company’s last accounting period in relation to which section 444BA of ICTA applied or is one that falls wholly or partly in the period of six years ending with the day on which that last accounting period ended.

(b)references to section 444BA of ICTA include that section as modified by regulations made under that Act.

29Transfer of whole or part of the business

(1)If—

(a)an insurance company carries on a business,

(b)amounts fall to be treated as receipts of the business as a result of section 26(4) (“deemed receipts”), and

(c)under an insurance business transfer scheme there is a transfer of the whole or part of the business to another insurance company within the charge to corporation tax,

the transferor and the transferee may jointly make an election for those deemed receipts to be allocated between them in accordance with the following provisions.

(2)If the transfer is a transfer of the whole of the business or substantially the whole of the business—

(a)section 26(6) does not apply in relation to the transferor (if it would otherwise have applied),

(b)the deemed receipt which, on the assumption that there had been no transfer, would have arisen in the transfer year is apportioned between the transferor and the transferee in accordance with subsection (5), and

(c)the remaining deemed receipts (if any) which, on that assumption, would have arisen in subsequent calendar years are treated as receipts of the transferee (and not as receipts of the transferor).

(3)If the transfer is a transfer of a part of the business and subsection (2) does not apply—

(a)the appropriate portion of the deemed receipt arising in the transfer year is apportioned between the transferor and the transferee in accordance with subsection (5), and

(b)the appropriate portions of the remaining deemed receipts (if any) are treated as receipts of the transferee (and the receipts of the transferor are reduced accordingly).

(4)The appropriate portion of a deemed receipt is to be determined on a just and reasonable basis.

(5)An apportionment under subsection (2)(b) or (3)(a) is to be made in proportion to the number of days of the calendar year falling before the day of the transfer and the number of days of the calendar year falling on or after the day of transfer.

(6)A deemed receipt which is treated as a receipt of the transferee as a result of this section is treated as a receipt of the business of the transferee which consists of or includes the transferred business, and, accordingly, section 26(4)and (6) have effect in relation to the transferee—

(a)as if references to the company were references to the transferee, and

(b)as if references to the business were references to the business of the transferee which consists of or includes the transferred business.

(7)An election under this section—

(a)must be made by notice to an officer of Revenue and Customs within 28 days from the end of the day on which the transfer takes place,

(b)must be accompanied by an explanation as to the way in which the transferor and the transferee have determined any issue falling to be determined for the purposes of this section, and

(c)is irrevocable.

(8)In this section—

“the transferred business” means so much of the business as is transferred to the transferee, and

“the transfer year” means the calendar year in which the transfer takes place.

(9)If a company makes an election under this section as the transferee, this section has effect for the purposes of any subsequent elections made by the company under this section as the transferor as if references to the business were references to the activities in respect of which deemed receipts are treated as arising to it.

30Abolition of relief for equalisation reserves: Lloyd’s corporate members etc

(1)Regulations made by the Treasury under section 47 of FA 2009 (equalisation reserves for Lloyd’s corporate and partnership members) that revoke previous

regulations made under that section may include provision corresponding to the provision made by sections 26(4) to (8) and 27, subject to such modifications as may be made in the regulations.

(2)Section 47 of FA 2009 is repealed.

(3)That repeal has effect in relation to accounting periods ending on or after such day (“the specified day”) as is specified in an order made by the Treasury (and different days may be specified for different cases).

(4)Subsections (2) and (3) are not to affect the operation of any transitional or saving provision included (whether as a result of this section or otherwise) in regulations made under section 47 of FA 2009 that revoke previous regulations made under that section so far as the provision remains capable of having effect in relation to times falling on or after the specified day.

Miscellaneous

31Tax treatment of financing costs and income

Schedule 5 contains provision about the tax treatment of financing costs and income.

“(5A)References in this section to the disposal of a debt include the disposal of an interest in a debt (and, in the case of an interest in a debt, the reference in subsection (3) to the amount of the debt is to the amount of the person’s interest in the debt).”

(4)For section 252 substitute—

“252Foreign currency bank accounts

(1)Section 251(1) does not apply in relation to a gain accruing to a person on a disposal of a foreign currency debt (or an interest in such a debt) unless that person is—

(a)an individual,

(b)the trustees of a settlement, or

(c)the personal representatives of a deceased person.

(2)A “foreign currency debt” is a debt—

(a)owed by a bank in a currency other than sterling, and

(b)represented by a sum standing to the credit of an account-holder in an account in that bank.”

(5)A statutory instrument containing regulations under this section must be laid before the House of Commons after being made.

(6)The regulations cease to have effect at the end of the period of 40 days beginning with the day on which the instrument is made unless before the end of that period the instrument is approved by a resolution of the House of Commons.

(7)After an instrument containing regulations under this section has been approved under subsection (6), subsections (5) and (6) do not apply to any subsequent such instrument (and accordingly section 287(3) applies to any such instrument).

(8)If regulations cease to have effect as a result of subsection (6), that does not—

(a)affect anything previously done under the regulations, or

(b)prevent the making of new regulations to the same or similar effect.

(9)In calculating the period of 40 days for the purposes of subsection (6), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than 4 days.

(10)In this section—

“modify” includes amend, repeal or revoke, and

“participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000.”

“(2)The Treasury may by order made by statutory instrument amend section 155 of the Taxation of Chargeable Gains Act 1992 (roll-over relief: relevant classes of assets) so as to add to or amend the classes of assets specified in that section.

(2A)But an order under subsection (2) may not restrict the assets which fall within a class listed in that section (whether by virtue of subsection (2) or otherwise).

(2B)An order under subsection (2) may make such consequential amendments of section 156ZB of, or Schedule 7AB to, the Taxation of

Chargeable Gains Act 1992 as appear to the Treasury to be appropriate.”

(3)Accordingly, section 43(3) of FA 2002 is repealed.

(4)The amendment made by subsection (1) has effect where the disposal of the old assets (or an interest in them) or the acquisition of the new assets (or an interest in them) is on or after 1 January 2009.

CHAPTER 5Miscellaneous

Enterprise incentives

38Seed enterprise investment scheme

Schedule 6 contains provision for and in connection with the seed enterprise investment scheme (including provision for re-investment relief under TCGA 1992).

41Plant and machinery: restricting exception for manufacturers and suppliers

(2)The amendment made by subsection (1) has effect in relation to expenditure of B’s that is incurred on or after 12 August 2011 (regardless of when the relevant transaction was entered into).

(3)But, in relation to any such expenditure that is incurred before the next amendment date, the restriction in section 217 of CAA 2001 does not apply (despite subsection (1)) if B can show that the condition in subsection (4) is met.

(4)The condition is that, had the amendments made by paragraphs 1 to 7 of Schedule 9 had effect in relation to the expenditure, the restriction in section 217 would not have applied.

(5)“The next amendment date” means the date defined in paragraph 9 of Schedule 9 as the start date.

42Plant and machinery allowances: anti-avoidance

Schedule 9 contains provision to counter abuse of Part 2 of CAA 2001.

43Plant and machinery allowances: fixtures

Schedule 10 contains provision about plant and machinery allowances in respect of fixtures.

44Expenditure on plant and machinery for use in designated assisted areas

Schedule 11 contains provision about first-year allowances in respect of expenditure on plant and machinery for use in designated assisted areas.

45Allowances for energy-saving plant and machinery

(1)Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

“45AA Section 45A exclusion: payments under Energy Act 2008 schemes

(1)Expenditure incurred on or after the relevant date on plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45A if—

(a)a payment is made, or another incentive is given, under a scheme established by virtue of section 41 of the Energy Act 2008 (feed-in tariffs) in respect of electricity generated by the plant or machinery, or

(b)a payment is made, or another incentive is given, under a scheme established by regulations under section 100 of that Act (renewable heat incentives) in respect of heat generated, or gas or fuel produced, by the plant or machinery.

(2)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).

(3)If a person who has made a tax return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, the person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(4)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(5)Except as provided by subsection (6), the relevant date is—

(a)for corporation tax purposes, 1 April 2012, and

(b)for income tax purposes, 6 April 2012.

(6)In the case of expenditure incurred on a combined heat and power system, the relevant date in relation to subsection (1)(b) is—

(a)for corporation tax purposes, 1 April 2014, and

(b)for income tax purposes, 6 April 2014.”

(4)In section 104A (special rate expenditure)—

(a)in subsection (1), omit the “and” after paragraph (e), and after paragraph (f) insert “, and

(g)expenditure incurred on or after the third relevant date on the provision of solar panels.”, and

any other relevant lease-related payment (see subsections (2FA) and (2G)).”

(3)After subsection (2F) insert—

“(2FA)Relevant lease-related payment” means any payment which—

(a)is payable at any time for the benefit (directly or indirectly) of the lessee or a person connected with the lessee,

(b)is connected with the long funding lease, or with any arrangement connected with that lease, and

(c)is not—

(i)an initial payment or any other payment made to the lessor by the lessee under the lease, or

(ii)a payment made to the lessor by the lessee under a guarantee of any residual amount (as defined in section 70YE),

if, and to the extent that, the payment is not otherwise brought into account for tax purposes as income or a disposal receipt by the person for whom the benefit is payable (or would not be if that person were within the charge to tax).

(2FB)For the purposes of subsection (2FA) “payment” includes the provision of any benefit, the assumption of any liability and any other transfer of money’s worth; and “payable” is to be construed accordingly.”

(4)For subsection (2G) substitute—

“(2G)In the case of a lease that is not a transaction at arm’s length, “relevant rebate” and “relevant lease-related payment” include any amount that would reasonably be expected to have fallen within subsection (2F) or, as the case may be, (2FA) if the lease had been such a transaction.”

(5)The amendments made by this section have effect in relation to cases where the relevant event occurs on or after 21 March 2012.

Foreign income and gains

47Foreign income and gains

Schedule 12 contains provision about the taxation of foreign income and gains.

Pensions

48Employer asset-backed pension contributions etc

Schedule 13 contains—

(a)provision relating to employers who pay contributions under registered pension schemes and arrangements for which their contributions are used (directly or indirectly), and

(b)provision amending Chapter 5B of Part 13 of ITA 2007 and Chapter 2 of Part 16 of CTA 2010 (finance arrangements).

Charitable giving etc

49Gifts to the nation

Schedule 14 contains provision for a person’s tax liability to be reduced in return for giving pre-eminent property to the nation.

(a)(if the payment is made, whether directly or indirectly, to a connected person) for the period of account in which that part of the restoration work to which the payment relates is completed, or

(b)(in any other case) for the period of account in which the payment is made.

(3A)But no deduction is allowed if the payment arises from arrangements—

(a)to which the company carrying on the trade is a party, and

(b)the main purpose, or one of the main purposes, of which is to obtain a deduction under this section.”

(6)At the end of that section insert—

“(7)Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).”

(7)The amendments made by this section have effect in relation to any site restoration payment made on or after 21 March 2012, other than a payment made pursuant to an unconditional obligation in a contract made before 21 March 2012.

(8)An unconditional obligation is an obligation which may not be varied or extinguished by the exercise of a right (whether or not under the contract).

(a)a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and

(b)a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice.”

(a)a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and

(b)a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice.”

(3)Corresponding amendments are to be treated as having been made in section 64 of FA 2002.

(4)In consequence of the amendment made by subsection (1)(b), omit paragraph 2 of Schedule 6 to F(No.2)A 2005.

(5)The amendments made by this section have effect in relation to a change of basis if the new basis—

(a)is adopted for a period of account which begins on or after 1 January 2012, or

(b)is adopted for a period of account which begins before 1 January 2012 and the adoption is in consequence of the issue, revocation, amendment or recognition of, or withdrawal of recognition from, an accounting standard by an accounting body on or after 1 January 2012.

(6)In this section—

“accounting body” means the International Accounting Standards Board, the Accounting Standards Board, or a successor body to either of those Boards;

“accounting standard” includes any statement of practice, guidance or other similar document.

Part 2Insurance companies carrying on long-term business

CHAPTER 1Introductory

Outline of provisions of Part

55Overview

(1)This Part makes special provision for corporation tax purposes in relation to life assurance business and other long-term business carried on by insurance companies.

(2)Chapter

1

explains some of the key concepts for the purposes of this Part, including the concept of basic life assurance and general annuity business (abbreviated to “BLAGAB”).

(3)Chapter

2

—

(a)provides for the profits of BLAGAB to be subject to a charge to corporation tax on the I - E basis as the profits of a separate business, and